Understanding the Tasmanian energy market

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Tasmania has historically been home to one of the most heavily regulated energy markets in Australia. While this meant retail competition was non-existent until recently, it at least made electricity and gas prices fairly stable and easy to understand. In this article, Canstar Blue introduces you to Tasmania’s energy retailers and distributors, and explains the fundamentals of the Tasmanian energy market.

The difference between retailers, distributors and generators

Before we get underway, it’s worth making a basic point on terminology. The electricity and gas markets can respectively be broken into three tiers – retailers, distributors and generators.

• Generators: Produce the electricity and/or natural gas. Tasmania’s main electricity generator is Hydro Tasmania. Natural gas in Tasmania is imported from a variety of generators on the mainland.
• Distributors: These companies are responsible for delivering the electricity and gas from the generators to your property. Tasmania’s electricity distributor is TasNetworks. There are two gas distributors – Auroura Gas and Tas Gas.
• Retailers: Retailers are responsible for billing and customer services. The main retailers are Aurora Energy – an electricity and natural gas retailer – and Tas Gas, a natural gas retailer. But as we’ll come to, a couple of competitors have now joined the electricity market for the first time.

Can I choose my electricity retailer? You can now!

Aurora Energy was the only electricity retailer servicing homes in Tasmania until February 2019 when 1st Energy was permitted to enter the local market. While the Tasmanian government introduced Full Retail Competition in 2014, allowing for other retailers to enter the market and compete for customers, no one came to the table until Melbourne-based 1st Energy made the move. This was likely because power prices remain regulated. However, the good news for electricity customers in Tasmania is that, with a regulated price cap, the only way is down for any electricity retailer new to the market and looking to get households to switch.

Since the arrival of 1st Energy, another retailer has also entered the market, though it’s not quite as simple to say there is now a ‘third’ choice. That’s because the third retailer is Catch Energy, the energy brand of online deals website Catch.com.au. However, Catch Energy works with 1st Energy, so while you will sign up through Catch, you are effectively becoming a 1st Energy customer. The brands do this across all of the states where they operate, not just Tasmania. You’ll get very similar pricing whether you sign up with Catch or 1st Energy, though the perks on offer do vary.

In late 2019, Future X Power also entered the Tassie market, offering one market offer with a small pay on time discount. As of late 2020, Energy Locals also entered the ring, shaking up the scene with an affordable electricity plan that provides customers with access to wholesale electricity rates for a monthly membership fee.

Tasmania Energy – Price Check

Business Electricity Retailers in Tasmania

There are three electricity retailers for businesses to choose from in Tasmania. They are:

• ERM Business Energy (All businesses)
• Flow Business Energy (For businesses consuming 160 mWh/year+)
• AGL (For businesses consuming 4 GWh/year+).

Aurora Energy also contracts business electricity customers. Businesses using less than 150 mWh are charged the same as residential Aurora customers, while a different pricing structure applies to businesses using more than 150 mWh.

Most experts attribute the lack of residential market competition to price regulation. As it stands, profit margins are too small for most new retailers to come to Tasmania. With wholesale power prices rising and the possibility of a price hike, there’s speculation that the government may consider deregulating electricity prices in the future to encourage more competition.

Tasmania Residential Electricity Prices

If you’ve been following the news, chances are you’ve heard of the ‘national energy crises’. Power prices have soared across most of Australia, putting strain on the cost of living. While Tasmanians have seen a slight increase in the cost of electricity, the state government’s electricity price cap has kept rates reasonable in recent years (at least compared to other parts of the country). With that said, wholesale electricity prices in Tasmania may still rise due to its link with the Victorian wholesale price. That means the government price regulation can’t be protected from price hikes forever.

Aurora Electricity Rates

The table below shows Aurora Energy’s electricity usage and supply charges for Tasmania, with five different tariffs available. A tariff refers to the electricity pricing structure. Different rates apply to different the tariffs. Below are Aurora’s standard residential electricity prices.

Prices as of February 2021. Visit Aurora Energy for more details.

Customers interested in tariff 93 will require a smart meter. It’s also important to point out that tariffs 61 and 62 are controlled load tariffs and don’t operate as a primary electricity tariff.

1st Energy Electricity Rates

The first residential electricity challenger to Aurora Energy, 1st Energy offers very similar prices across its tariff structures. However, keep in mind that even subtle differences can have a big impact over time.

Prices as of February 2021. Visit 1st Energy for more details.

Future X Power Electricity Rates

Future X Power offers slightly higher rates across the board than its competitors. With this retailer, you’ll only be able to sign up to a single rate plan, meaning you’ll pay the same rates no matter the time of day.

Prices as of February 2021. Visit Future X Power for more details.

Energy Locals Electricity Rates

Challenger brand Energy Locals appears to have lower rates than the other providers available in the state. Here’s what’s on offer from this retailer:

Prices as of February 2021. Visit Energy Locals for more details.

Electricity Discounts in Tasmania

The rates you pay for electricity in Tasmania are naturally hugely important. But the retailers also have other ways to help reduce your overall costs – namely through conditional discounts. The two electricity retailers in Tasmania currently offer the following electricity discounts:

• Aurora Energy: Customers who pay by direct debit may be eligible to receive a direct debit discount of 5.5 cents per day (inc. GST). That works out to about $20 a year.
• 1st Energy: Customers on the 1st Saver plan who pay their bills on time receive a pay on time discount of 5% off electricity usage charges. This discount lasts for 12 months. The retailer also has another plan that instead offers $100 in bill credit over 12 months.
• Future X Power: A 3% discount is available to customers who pay their bills on time. The discount applies to both the electricity usage and supply rates.
• Energy Locals: No discounts, access to wholesale rates.

What if you have solar panels?

When you factor in the savings that come with solar power generation, it’s often harder to determine which provider comes out as the cheapest bet. Aurora Energy and 1st Energy both have reasonable feed-in tariffs to consider:

• Aurora Energy has a solar feed-in tariff of 8.471 cents per kWh
• 1st Energy has a solar feed-in tariff of 8.471 to 13.471 cents per kWh. Contact 1st Energy for details.

Can I choose my natural gas retailer?

There are two natural gas retailers in Tasmania – Tas Gas and Aurora Energy. Both retailers supply gas to the full range of customers, including residential, business and industrial. Tas Gas entered the Tasmania market following the introduction of Full Retail Competition back in 2003 and has come to dominate the state with 8,000 customers, accounting for roughly 65% of the market share. Both gas companies have nearly identical prices and services, so your choice of gas supplier will ultimately come down to the quality of service and personal preference. Although the market is open for new competitors to enter, it seems unlikely Tasmania will see a new gas retailer until the market grows.

Tasmania Natural Gas Prices

The price of natural gas is not regulated in Tasmania, yet there is a negligible difference in price between Tas Gas and Aurora Energy. There are also no published discounts and very little consumer switching. As you can see, Tas Gas usage rates are marginally cheaper, with the retailer having identical supply charges.

Aurora Gas Rates

Tas Gas Rates

Prices as of February 2021. Visit Aurora Energy or Tas Gas for more details.

Aurora Energy Tasmania

Aurora Energy is a state government-owned corporation and until recently was Tasmania’s only electricity retailer. Aurora’s prices remain fairly reasonable despite the relative lack of discounting and competition. It also has green energy options for customers who are conscious about their carbon footprint:

• Aurora Green: GreenPower products whereby Aurora Energy agrees to source a portion of your electricity from green sources.

TasNetworks

TasNetworks is again a state government-owned corporation and Tasmania’s only electricity distributor. As a distributor, TasNetworks is responsible for maintaining the poles and wires across the state. TasNetworks is also in charge of checking and maintaining electricity meters.

If you’re having trouble with your electricity meter, you experience a power outage, you want to report a faulty streetlight, or you need clearance to work near power cables, TasNetworks is who you contact – not Aurora.

TasNetworks Solar

Installing solar in Tasmania requires approval from TasNetworks. There are six steps to installing solar in Tasmania:

1. Find an accredited solar installer
2. The Installer submits a connection application with TasNetworks
3. TasNetworks assesses whether solar system meets technical requirements and whether the network can accommodate your solar system.
4. Once approved, the solar installer will begin installation.
5. Before switching the solar system on, TasNetworks will install a digital import-export meter which makes it possible to receive a feed-in tariff.
6. The solar system is switched on and you’re ready to start saving with the power of the sun.

If you want to learn more about solar and how to find a reliable installer, check out our solar buying guide.

TasNetworks Contact information

TasNetworks is available to contact 9am-5pm Monday to Friday. The emergency line operates 24 hours, 7 days a week.

• Emergencies and faults: 132 004
• General enquiries: 1300 137 008
• Customer feedback: 1800 060 399

What’s next for Tasmania’s energy industry?

Tasmania has most of the ingredients for a competitive electricity and gas market, but it’s missing a vital piece – customers. With a population of only half a million, Tasmania is currently too small of a market for most major retailers to invest in. Additionally, while electricity prices are regulated, it’s doubtful that many mainland retailers will see much opportunity in Tasmania’s market. That said, we are now starting to see the benefits of some healthy competition, so if enough customers become proactive and switch around, it could encourage other retailers to give Tasmania more attention. We’ll have to wait and see on that one!

While Tasmanians are severely restricted in retailer choice, there’s plenty other ways to save on energy. Canstar Blue has some useful guides to get you started.

Canstar Blue Energy Guides

Original author: Brendon O’Neill